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Published August 23rd, 2016 by

Guide and Tips to Having the Best Expense Management Process

Guide and Tips to Having the Best Expense Management Process

Owning a business means having to make reports about expenses and other travel. It is a necessary evil of the job to know how much money is going out of the company. This is also a way to keep track if money are being well spent. The old way of doing it used to be collecting receipts and entering them one by one on the spreadsheet, printing it, and then submitting it for approval. The development of automated expense management has helped make the process easier. Keeping receipts is no longer a necessity and approval can be quicker when the reports are easily made and submitted. But having the top expense management software does not guarantee that all will be well when making expense reports. A proper execution is also needed. Companies want to the best practices when it comes to the expense process but some do not know what it really is. So here are some guide and tips to having the best expense management process.

Prepare an Expenses Policy

The first step to a successful execution is to make a policy. It should be fair but also firm and clear on what expenses are accepted and what are not. It should not be ambiguous so as not to create confusion for those that have to follow it. Expense policies are also needed to show the IRS that reimbursements are being made and they are being made to the right people. If you have already an expense policy in place, then it might be also good to update it if you have additional ones. The policy and regulations are important because they will be the backbone of the expense management software. Here are some tips when making a policy.

  1. Make sure that the policy is transparent and fair for everyone.
  2. The main objective of a policy is to control the expenses and costs of the business.
  3. It has to be made in a way that it will prevent fraud from employees. According to the survey done by Association of Fraud Examiners, there is an average loss of almost $140,000 due to fraud for a typical company.
  4. Make a policy that will be easy to implement using the software. The software has to ensure that the policies are being followed.
  5. It has to cover everything that an employee might spend on.

Keep the Process Simple

Another great tip for the best practices is to keep the process of expense reporting very simple. Oftentimes, the approval process is so long because of the complexities of the process. There are so many forms to fill out that are actually unnecessary. Sometimes, the employee does not know what the steps to proper expense reporting are and who to submit it to. Making the process simple and neat is a great tip so employees will be able to do it easily and efficiently. The use of an expense management tool will make the process easier and with a little training, everyone will be able to do it. With a simple process there is less risk of making errors.  The Global Business Travel Association has released a report saying that 19% of all expense reports contain errors and that it will cost about $52 to correct each one. Keeping the process simple will ensure that errors are kept to the bare minimum. And not committing error will save your company a lot of money.

Collect Information

Using an automated expense management system makes collecting relevant information easier. Receipts are needed to ensure that expense claims are real and not fraudulent. It is not enough that you just accept the expense and when it was made, a proof of it is needed. These are also required by the IRS as evidence of all expenses coming out of the company. But oftentimes, these are the downfall of employee expense reports. Not because it’s hard to acquire a receipt but because it is easily lost. Using the automated software, you can scan or take a picture of the receipt and upload it to the system, so even if you have lost the paper receipt you will still have proof. Not all software will accept scanned receipts though, so make sure to read reviews of expense management tools to know which software will make collecting information easier. Reading reviews will help you with the decision to choose which software is the best for gathering information.

Submit and Approve on Time

The best tip to follow for the best expense management process is to be always on time. When expense reports are submitted there should be a given time frame on when it might be approved and when the money might be reimbursed. Some companies receive hundreds or reports in a week that it might be hard on them to approve everything in a timely manner. Using the best expense management tools will greatly help with this problem. The approvers of the reports will be reached quickly with the software. There is no longer a need for your reports to go to different people before reaching the right person. The software can ensure that the report will be routed to the approver directly. The usual approval process can be cut in half with the automated process. Doing it online can also save you time, because there will no more printing to be done. Time and money will be saved with the automated process.

Check Expenses for Compliance

Streamlining the process is important for both the employees and the company. But this does not mean that expense reports should not be checked for compliance. Using an expense management solution will help managers check the reports with regards to their compliance to the policies and regulations. Those that are found to in violation of the standing policies should be reprimanded. This is a great way to avoid fraud. Make the managers accountable if noncompliance and fraud is found and the reports were approved. The best expense management process included that every report is done with no errors and all expenses are accounted for.

A problem that might occur with non-compliance is because the employees including the managers do not understand what the policy is all about. So to ensure that everyone understands the regulations they have to follow, a simple lecture on what the policies are should take place. Any updates on the policy should also be sent to everyone.

Use an Expense Management Software

The use of an expense management tool has allowed employees to submit their reports on the go. The approval of said reports can also be done outside of the office. This is because the software is usually hosted using cloud based solutions. This allows for access to the system even when you are not in the office. Just as long as you have a device and an internet connection, you can access the system, make, submit and approve reports. This makes the expense process much easier because it doesn’t have to be limited to the 9-5 working hours. Be sure to acquire an expense management software that is cloud based so it will allow access anywhere and anytime. Read reviews of expense management software to know which software are hosted using cloud or in-premise. Moreover, choose a software that will allow the use of smartphones and tablet rather than just the computer. When you are on the go, it is harder to use a computer than a phone. So for more accessible report making make sure the software can be mobile.

Audit the Process and Expenses

Following all the tips and guides mentioned above, your expense management process should be amazing. But once in a while an audit process should also be done. This is to ensure that no problems are being faced both by the employees and the managers. This is not to find fault with the process but to see what works and what does not. This will help you make necessary changes and to improve on some processes that need updating. Any glitches and problems with the software can also be seen when auditing the process.

Receipts are another thing that should be audited. A survey done by Chrome River reveals that fraud costs a company about $2,400 per year per employee who commits fraud. That is a lot of money wasted that can be prevented if the receipts are checked routinely and correctly.

Reimburse the Money on Time

Lastly, for the best expense management process, you should always reimburse the money to your employees on time. Waiting for money that was owed you is aggravating, especially if you know you did your job and submitted the report on time. Nothing is more exasperating than waiting for the money that you could have used to feed your family or to pay the bills. Do your employees a favor and always pay them in a timely manner.

In conclusion, it is not enough that you have chosen the best expense management tools available out there; it also has to be implemented and followed well. But with the best tools, the implementation will be easy. The best practices are actually simple and can be done by any company.

Looking for an expense management software to help streamline the expense management process? Check out the reviews in CrowdReviews.com.

John Tovar

John specializes in the creation and planning of business-centric mobile applications and mobile website design and development.

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